@katherrera9
Closing costs are a little more complicated. Anything that the bank charges you, they can do for free or give you a discount and that is not taxable, even if they put it on the statement in the form of a discrete grant. For example, we might assume that there is a $500 application fee, $500 bank attorney fee, a $400 appraisal fee, and $1000 fee for title search and title insurance. That’s $2400 of bank fees, and if the bank gives you a $2000 discount, that’s not taxable, no matter how they put it on the statement.
If the bank gives you more off the closing cost than their fees, that might be taxable, but it would depend on the exact situation. For example, if the bank gives you cash to fund your escrow account for future tax payments, that’s probably taxable income because it’s free money to you and not just a discount. If the seller pays your closing costs, that’s treated as an adjustment in the purchase price and is also not taxable. (If you buy a house for $100,000, and the seller pays $3000 of your closing cost, then you were really only paying $97,000.)
I can’t be more specific without knowing exactly what the grant or rebate or discount is supposed to pay for.
